Why do sureties require personal guaranties?
The general rule is for sureties to require the owners of closely held firms to guarantee the bonds issued to the corporation as Principal. The reasoning is that the surety is your partner and wants assurance that the owners of the firm, who stand to profit most from the value added by the bond projects, are comfortable and confident that they can successfully complete the bonded contract. Their personal endorsement tells the surety that the information presented to the surety to qualify the firm for bonding is accurate and complete and they are willing to put their personal wealth behind their statements to the surety. In some instances, personal guarantees are required to tie in personal assets that could be necessary to help the company complete and finance the work; but, more often, it is simply that the surety wants to be able to count on the owners (who are usually the active managers) to be there when and if problems arise and to cooperate and work with the surety toward a succe
